Searching for the right property for a rental will depend on what your goals are and what you want to achieve.  There is no right or wrong property.  Let’s take a look at each property and the advantages and disadvantages of each one.

Town homes 

Town homes are a great investment for resale and appreciation. The big challenge however can be cash flow.  For resale you want to look for parking and access to the back yard.  Three bedrooms will catch more rent and will be easier to sell down the road.  The quality of renter is also better.  I do prefer these homes because over the long-term the cash flow will be there.  Renters tend to be working professionals and long term.

Detached homes 

If you can find a detached home with an in-law suite or legal basement even better.  If it can be converted, you will increase the value of your investment and the resale down the road.  With an upper and lower rental, you can get good tenants and cash flow.  If it just a single rental it will be hard to have the cash flow so be prepared to put money in every month.  Resale in a good location will also be good with high appreciation.

Condos 

The big problem with condos is the condo fee.  Quite often, for the price you can purchase a town home with much higher appreciation.  The advantages of the condo: low maintenance, good quality renters.  Condos will not cash flow so expect to be out a lot of money and every time the condo fee goes up the appreciated value of the condo goes down.  The only time we would recommend a condo for investment would be for the following.  You are purchasing it as a future retirement location, for a child going to university or a small town where condos are scarce and in high demand.  They can also be a great purchase for a vacation property or when considering an Airbnb.

Condo / Hotel- Condo / Hotel 

These are poor investments for appreciation and cash flow.  The condo Corp controls the rental and cleaning.  Fees are high.  Buyers should be aware the projections are usually way over inflated.  But the biggest issue with this type of property is when it comes to the resale.  They are very difficult to sell and even harder to finance.  Most lenders will not look at them.

Student rental properties 

The right property can make a lot of money in cash flow.  Student rentals are not for everyone.  Lenders do not like them, insurance companies do not like them.  They do provide a high cash flow, and quick turn over so you can increase the rent more often.  The big drawback is the damage to the property.  If you are considering a student rental, I would recommend being very close to the location or having someone in the property that you know and can trust.

Cottage property 

Most people do not buy cottages for long-term rental.  As an Airbnb option they can be one of the highest cash flow investments and have fantastic appreciation and resale.  More and more Canadians are looking to retire in cottage country.  Best choice is waterfront or near waterfront.  Look for nearby activities.  Hiking trails, skiing, year round activities.  The big drawback to cottages is a lot of municipalities are pulling away from Airbnb properties.  Requiring licences, home inspection and disallowing them all together.  You really need to be careful where you buy and check with the local by laws.  You also risk the by-laws changing after you purchase.

Duplex 

Having two incomes from one property will put you in a better cash flow position.  Renters are still good, and the appreciation is good.  A duplex can also be easy to sell, depending on the location.  They are good for 1st time home buyers and investors.

Triplex / Four plex  

Most investors prefer the triplex and four plex properties for the cash flow.  Most of these properties are century homes and will require work.  If you can find a fully renovated one or one that has been well maintained, then you might be in luck.  They do appreciate well and like I said, the cash flow can be excellent.  The draw back?  The properties can be expensive, they are usually sold already rented with low rents.  The quality of the renters is usually poor.  If you are new to the game, be sure to use a qualified property manager.  Resale can also be tough as your only buyer are investors with deep pockets.

5 plex or higher / Commercial  

Once you get into a 5 plex or higher, you really are making a business out of investing.  Commercial units hold a different risk.  Resale could be years on the market.  The appreciation is usually there and so is the cash flow.  For the average investor I would recommend something smaller.

New builds 

New builds can be very lucrative and easy to resell.  But here’s the thing with a new build.  In most cases 20% down is required in the first year.  You will not get the tax break.  Markets can change from the time you purchased to the time you closed (not always in the right direction).  You may not qualify for the mortgage.  Maybe your circumstances changed.  GST on the sale for investors.  You need to hold the property for 1 year or may not be allowed to rent it.  Government regulations can change.  People who buy new builds are usually doing it for a flip and a quick buck.  Just like all investments, there are risks and you can get caught on the wrong side of the market.  These types of flippers are also driving up the housing market.  Trust me the government has taken notice.  I would not be surprised to see changes in legislation on investors buying new builds.